SEPARATION AGREEMENT
This Separation Agreement (this "Agreement") is entered into as of December 8,
1997 by and among Xxxxx Xxxxxx Sons', Inc., a Delaware corporation ("PKS"),
Kiewit Diversified Group Inc., a Delaware corporation ("KDG"), PKS Holdings,
Inc., a Delaware corporation ("PKS Holdings"), and Kiewit Construction Group
Inc., a Delaware corporation ("KCG", and together with PKS, KDG, and PKS
Holdings, collectively the "Parties" or individually a "Party").
Recitals
The Board of Directors of PKS has approved, by a unanimous vote of the Board,
a series of transactions intended to separate the construction businesses of
PKS and the diversified businesses of PKS into two separate and independent
companies, and the stockholders of PKS have ratified the action of the PKS
Board. PKS, KDG (the subsidiary of PKS that holds, directly or indirectly,
all of the diversified businesses of PKS), KCG (the subsidiary of PKS that
holds, directly or indirectly, all of the construction businesses of PKS) and
PKS Holdings (a subsidiary of PKS formed to acquire from PKS all of the
capital stock of KCG in connection with the separation) want to provide for
the principal corporate transactions necessary to consummate the separation,
the relationships among the Parties after the separation, the allocation of
risks and responsibilities among the Parties after the separation and certain
other matters.
The Parties hereby agree as follows:
Agreement
ARTICLE I
DEFINITIONS
1.01 General. Terms used but not elsewhere defined in this Agreement
have the following meanings:
Affiliate: with respect to any Person, a Person that directly, or
indirectly through one or more intermediaries, controls, is controlled by, or
is under common control with, such specified Person; provided, however, that
for purposes of this Agreement, no member of either Group will be deemed to be
an Affiliate of any member of the other Group.
Asset: any and all assets and properties, whether real, personal or
mixed, tangible or intangible, wherever located, and whether or not recorded or
reflected or required to be recorded on the books and records or financial
statements of any Person, including, without limitation, the following: (i)
cash, cash equivalents, bank accounts, lock boxes and other deposit
arrangements, notes, deposits, letters of credit, performance and surety bonds,
trade accounts and other accounts and notes receivable (whether current or non-
current); (ii) certificates of deposit, banker's acceptances, stock,
debentures, evidences of indebtedness, certificates of interest or
participation in profit-sharing agreements, collateral-trust certificates,
preorganization certificates or subscriptions, capital contributions, joint
venture and partnership interests, transferable shares, investment contracts,
voting-trust certificates, fractional undivided interests in oil, gas or other
mineral rights, puts, calls, straddles, options and other securities or equity
interests of any kind or in any Person; (iii) trade secrets, confidential
information, registered and unregistered trademarks, service marks, service
names, trade styles and trade names and associated goodwill; statutory, common
law and registered copyrights; domestic and foreign patents, applications for
any of the foregoing, rights to use the foregoing and other rights in, to and
under the foregoing; (iv) rights under leases, contracts, licenses, permits,
distribution arrangements, sales and purchase agreements, other agreements and
business arrangements; (v) real estate, all interests in real estate of
whatever nature and buildings and other improvements thereon; (vi) leasehold
improvements, fixtures, trade fixtures, machinery, equipment (including
transportation and office equipment), tools, dies and furniture; (vii) office
supplies, production supplies, spare parts, other miscellaneous supplies and
other tangible property of any kind; (viii) raw materials, work-in-process,
finished goods, consigned goods and other inventories; (ix) prepayments or
prepaid expenses; (x) claims, causes of action, choses in action, rights of
recovery and rights of set-off of any kind; (xi) the right to receive mail,
payments on accounts receivable and other communications; (xii) lists of
advertisers, records pertaining to advertisers and accounts, personnel records,
lists and records pertaining to suppliers and agents, and books, ledgers, files
and business records of every kind, whether in paper, microfilm, microfiche,
computer tape or disk, magnetic tape or any other form; (xiii) advertising
materials and other printed or written materials; (xiv) goodwill as a going
concern and other intangible properties; (xv) employee contracts, including any
rights thereunder to restrict an employee from competing in certain respects;
(xvi) licenses and authorizations issued by any governmental authority; (xvii)
all apparatus, computers and other electronic data processing equipment,
fixtures, machinery, equipment, furniture, office equipment, automobiles,
trucks, aircraft, rolling stock, vessels, motor vehicles and other
transportation equipment, special and general tools, test devices, prototypes
and models and other tangible personal property; (xviii) all written
technical information, data, specifications, research and development
information, engineering drawings, operating and maintenance manuals, and
materials and analyses prepared by consultants and other third parties; (xix)
all computer applications, programs and other software, including operating
software, network software, firmware, middleware, design software, design
tools, systems documentation and instructions (excluding, for purposes of the
definition of Construction Assets, any property of PKSIS); (xx) all cost
information, sales and pricing data, customer prospect lists, supplier
records, customer lists, customer and vendor data, correspondence and lists,
product literature, artwork, design, development and manufacturing files,
vendor and customer drawings, (xxi) formulations and specifications, quality
records and reports and other books, records, studies, surveys, reports,
plans and documents; and (xxii) except as otherwise expressly provided
herein, all rights under insurance policies and all rights in the nature of
insurance, indemnification or contribution.
Certificate Amendments: the Initial Certificate Amendment and the Post-
Transaction Certificate Amendment.
Class C Stock: the Class C Construction & Mining Group Restricted
Redeemable Convertible Exchangeable Common Stock of PKS, par value $.0625 per
share.
Class D Stock: the Class D Diversified Group Convertible Exchangeable
Common Stock of PKS, par value $.0625 per share.
Class R Stock: the Class R Convertible Common Stock of PKS, par value
$.01 per share, proposed to be authorized pursuant to the Initial Certificate
Amendment and issued pursuant to the Class R Distribution.
Class R Distribution: the distribution, as a dividend, by PKS of the
Class R Stock pursuant to Section 3.06.
Class R Distribution Record Date: January 2, 1998, or such other date
occurring after the Debenture Conversion Date but before the Excess Purchase
Date, which is selected by the PKS Board as the record date for determining
holders of record of Class C Stock entitled to receive the Class R
Distribution.
Code: the Internal Revenue Code of 1986, as amended, or any successor
legislation, together with the rules and regulations promulgated thereunder.
Construction Assets: all of the Assets utilized immediately prior to the
Exchange Date by any member of the Construction Group in connection with the
Construction Business.
Construction Business: all of the businesses and operations conducted at,
or at any time before, the Exchange Date by PKS or any Subsidiary of PKS, the
principal focus of which are or were construction or construction management
activities.'
Construction Group: PKS Holdings, KCG and the Subsidiaries of KCG as of
the Exchange Date.
Construction Indemnitees: any member of the Construction Group, any
Construction Individual and any Affiliate of any member of the Construction
Group.
Construction Individual: any individual who at any time prior to the
Exchange Date was a director, officer or employee of any member of the
Construction Group, but solely to the extent that any Loss incurred by such
Person is incurred in that capacity.
Construction Liabilities: all of the Liabilities arising out of or
resulting from the Construction Business, and any Liability which any member of
the Construction Group is obligated to assume pursuant to Section 5.02.
Construction Securities Transactions: the offer to sell or the sale of
Class C Stock, PKS Holdings Stock or debentures convertible into Class C Stock
or PKS Holdings Stock.
Diversified Assets: all of the Assets utilized immediately prior to the
Exchange Date by any member of the Diversified Group in connection with the
Diversified Business.
Diversified Business: all of the businesses and operations conducted at,
or at any time before, the Exchange Date, by PKS, other than the Construction
Business.
Diversified Group: PKS, KDG and all of the Subsidiaries of KDG as of the
Exchange Date.
Diversified Indemnitees: any member of the Diversified Group, any
Diversified Individual and any Affiliate of any member of the Diversified
Group.
Diversified Individual: any individual who at any time prior to the
Exchange Date was a director, officer or employee of any member of the
Diversified Group, but solely to the extent that any Loss incurred by such
Person is incurred in that capacity.
Diversified Liabilities: all of the Liabilities arising out of or
resulting from the Diversified Business, and any Liability which any member of
the Diversified Group is obligated to assume pursuant to Section 5.02.
Diversified Securities Transaction: the offer to sell or the sale of
Class D Stock, Class R Stock or debentures convertible into Class D Stock,
including the issuance of any stock option convertible into Class D Stock.
Dividend Condition: with respect to the distribution in connection with
the Class R Distribution and the distribution in connection with the Share
Exchange, a determination by the PKS Board that such distribution by PKS will
(a) comply with the PKS Certificate, as then amended and/or restated, (b) will
be made out of surplus, within the meaning of Section 170 of the Delaware
General Corporation Law and (c) will not result in the insolvency of PKS under
applicable fraudulent conveyance or fraudulent transfer statutes.
Exchange Act: the Securities Exchange Act of 1934, together with the
rules and regulations promulgated thereunder.
Exchange Date: the date on which the Share Exchange is made, which will
be a date determined by the PKS Board that occurs after satisfaction of all of
the conditions set forth in Section 2.08.
Exchange Record Date: the date selected by the PKS Board for determining
holders of record of Class C Stock entitled to receive PKS Holdings Stock in
the Share Exchange.
Group: either of the Construction Group or the Diversified Group.
Indemnifying Party: a Person who or which is obligated under Article IV
to provide indemnification.
Indemnitee: a Person entitled to indemnification under Article IV.
Indemnity Payment: an amount that an Indemnifying Party is required to
pay to an Indemnitee pursuant to Article IV.
Information: all information whether or not patentable or copyrightable,
in written, oral, electronic or other tangible or intangible forms, stored in
any medium, including studies, reports, records, books, contracts,
instruments, surveys, discoveries, ideas, concepts, know-how, techniques,
designs, specifications, drawings, blueprints, diagrams, models, prototypes,
samples, flow charts, disks, diskettes, tapes, computer programs or other
software, marketing plans, customer names, communications by or to attorneys
(including attorney-client privileged communications), memos and other
materials prepared by attorneys or under their direction (including attorney
work product), computer data and other technical, financial, employee or
business information.
Initial PKS Certificate Amendment: an amendment to the PKS Certificate in
the form of Appendix E-I to the Joint Prospectus/Proxy Statement.
Joint Prospectus/Proxy Statement: the joint prospectus/proxy statement
included in the Registration Statement and mailed to the holders of Class C
Stock and Class D Stock in connection with the Transaction.
Liabilities: all debts, liabilities and obligations, whether absolute or
contingent, matured or unmatured, liquidated or unliquidated, accrued or
unaccrued, known or unknown, whenever or however arising, and whether or not
the same would properly be reflected on a balance sheet, including all related
costs and expenses.
Losses: all losses, Liabilities, damages, actions, claims, suits,
demands, proceedings, inquiries, investigations, judgments or settlements of
any nature or kind, known or unknown, fixed, accrued, absolute or contingent,
liquidated or unliquidated, including all related costs and expenses (legal,
accounting or otherwise as such costs are incurred) suffered by an Indemnitee.
PKS Board: the board of directors of PKS (or the executive committee of
the board of directors of PKS, if the executive committee of the board of
directors of PKS has the authority to take the action required under this
Agreement).
PKS Certificate: the Restated Certificate of Incorporation of PKS, as in
effect on the date of this Agreement.
PKS Holdings Certificate Amendment: an amendment to and restatement of
the Certificate of Incorporation of PKS Holdings in the form of Appendix D to
the Joint Prospectus/Proxy Statement.
PKS Holdings Stock: the common stock of PKS Holdings, $.01 par value.
PKS Stockholders: the holders of Class C Stock, the holders of Class D
Stock and, if applicable, the holders of Class R Stock, taken together.
PKSIS: PKS Information Services, Inc., a Delaware corporation, and a
Subsidiary of KDG.
Person: an individual, a partnership, a limited partnership, a joint
venture, a limited liability company, a corporation, a trust, an unincorporated
organization, any other entity or a government or any department or agency
thereof.
Post-Transaction PKS Certificate Amendment: an amendment to and
restatement of the PKS Certificate, as amended by the Initial Certificate
Amendment, in the form of Appendix E-II to the Joint Prospectus/Proxy
Statement.
Registration Statement: the registration statement filed by PKS and PKS
Holdings on Form S-4 (Registration No. 333-34627) pursuant to the Securities
Act, as amended from time to time.
Representative: with respect to any Person, any of such Person's
affiliates, directors, officers, employees, agents, consultants, advisors,
accountants, attorneys and representatives.
SEC: the Securities and Exchange Commission.
Secretary of State: the Secretary of State of the State of Delaware.
Securities Act: the Securities Act of 1933, as amended, together with the
rules and regulations promulgated thereunder.
Service: the United States Internal Revenue Service.
Separation Transactions: the transactions described in Section 3.01
through 3.08 of this Agreement.
Share Exchange: the exchange of PKS Holdings Stock for Class C Stock in
accordance with the Exchange Provision (as defined in Section 3.09).
Special Meeting: the special meeting of stockholders of PKS held on
December 8, 1997 to consider the matters described in Section 2.02.
Stock Option Plan Amendment: an amendment to and restatement of the 1995
Class D Stock Plan of PKS in the form approved by the PKS Board on October 22,
1997, as amended by the Executive Committee of the PKS Board on November 10,
1997.
Subsidiary: with respect to any specified Person, any corporation or
other legal entity of which such Person or any of its Subsidiaries controls or
owns, directly or indirectly, more than 50% of the stock or other equity
interest entitled to vote on the election of members to the board or similar
governing body.
Tax: as defined in the Tax Allocation Agreement.
Tax Allocation Agreement: a tax allocation agreement between the
Diversified Group and the Construction Group to be entered into as of the
Exchange Date, in form and substance mutually satisfactory to all of the
Parties.
Termination Date: the date upon which the Transaction will be abandoned
if not consummated, which will be October 15, 1998, unless that date is
extended by a duly adopted resolution of the PKS Board.
Third-Party Claim: any claim, suit, arbitration, inquiry, proceeding or
investigation by or before any court, any governmental or other regulatory or
administrative agency or commission or any arbitration tribunal asserted by a
Person who is not a member of a Group.
Transaction: all of the transactions contemplated by this Agreement,
taken together.
ARTICLE II
CONDITIONS TO TRANSACTION; ABANDONMENT
2.01 Registration Statement/Joint Prospectus/Proxy Statement. PKS and
PKS Holdings have prepared and filed the Registration Statement with the SEC,
the SEC has declared the Registration Statement effective, and PKS and PKS
Holdings have mailed the Joint Prospectus/Proxy Statement to all PKS
Stockholders.
2.02. Special Meeting. At the Special Meeting, PKS submitted (i) the
Transaction, (ii) the Initial PKS Certificate Amendment, (iii) the Post-
Transaction PKS Certificate Amendment and (iv) the Stock Option Plan Amendment
to votes of the PKS Stockholders, and each matter was ratified or approved by
the requisite vote of the PKS Stockholders.
2.03 Ruling Request. PKS has submitted to the Service a request for
certain rulings in connection with the Transaction (as amended from time to
time by PKS, the "Ruling Request"). The PKS Board may determine, at any time
after the date of this Agreement, to request an opinion of federal income tax
counsel to PKS, confirming any or all of the matters subject to the Ruling
Request, as the PKS Board deems appropriate (the "Tax Opinion"). If (a) either
the Service denies the Ruling Request or the Service does not grant the Ruling
Request before the Termination Date, and (b) the PKS Board has not requested
and received the Tax Opinion on or before the Termination Date, the Parties
will abandon the Transaction.
2.04 Nebraska Ruling Request. PKS is preparing for submission to the
State of Nebraska Department of Revenue a request for certain rulings in
connection with the Transaction (as amended from time to time by PKS, the
"Nebraska Ruling Request"). The PKS Board may determine, at any time after the
date of this Agreement, to request an opinion of Nebraska tax counsel to PKS,
confirming any or all of the matters subject to the Nebraska Ruling Request, as
the PKS Board deems appropriate (the "Nebraska Tax Opinion"). If (a) either
the Nebraska Ruling Request is denied or is not granted before the Termination
Date, and (b) the Nebraska Tax Opinion is not requested and received on or
before the Termination Date, the PKS Board will review the benefits of the
Transaction in light of the failure of the Nebraska Department of Revenue to
approve the Nebraska Ruling Request or the failure of the PKS Board to request
and receive the Tax Opinion, and will abandon the Transaction if the PKS Board
determines, by a duly adopted resolution, that consummation of the Transaction
is no longer in the best interest of all PKS Stockholders.
2.05 Termination Date. The Parties will abandon the Transaction if
the Share Exchange is not consummated on or before the Termination Date.
2.06 PKS Board Right to Defer, Modify or Abandon Transaction.
Notwithstanding any other provision of this Agreement, (a) prior to
consummation of the Transaction, the Parties will defer or modify the
Transaction or this Agreement in any respect deemed appropriate by the PKS
Board, and (b) the Parties will abandon the Transaction at any time if the PKS
Board, by a duly adopted resolution, determines that consummation of the
Transaction is no longer in the best interest of all PKS Stockholders. Nothing
herein shall limit or otherwise affect the PKS Board's ability to proceed with
the Transaction at a later date.
2.07 Consequences of Abandonment. If the Parties abandon the
Transaction (whether pursuant to Section 2.03, 2.04, 2.05 or 2.06), Articles
III, IV, V and VI of this Agreement will terminate and have no further force or
effect, the Parties will not be obligated to consummate any of the Separation
Transactions that have not then been consummated, and only this Section 2.07
and Articles I, VII and VIII of this Agreement will remain binding on the
Parties and have any further force or effect.
2.08 Conditions to Share Exchange. The Share Exchange will be
consummated only if (a) PKS has received either the rulings subject to the
Ruling Request and/or the Tax Opinion, (b) the Dividend Condition has been
satisfied with respect to the Share Exchange, (c) the Separation Transactions
have been consummated, and (d) the PKS Board has not determined to abandon the
Transaction. The condition set forth in clause (a) of the preceding sentence
shall not be waived.
ARTICLE III
THE SEPARATION TRANSACTIONS;
THE SHARE EXCHANGE
3.01 1997 Class C Stock Conversions. (a) Under Section VI.D.(10) of
the PKS Certificate, holders of Class C Stock may convert any or all of their
Class C Stock into Class D Stock by tendering a written conversion notice to
PKS between October 15, 1997 and December 15, 1997 (the "1997 Conversion
Period"). Under Section VI.D.(10)(f) of the PKS Certificate, PKS may elect, in
lieu of effecting the conversion, to purchase any shares of Class C Stock so
tendered by providing written notice to the tendering stockholders of such
election. If PKS makes such an election, the tendering stockholder may
withdraw the tender of the Class C Stock if he is then eligible under Section
VI.D.(1) of the PKS Certificate to own Class C Stock (an "Eligible Class C
Stockholder").
(b) PKS intends to permit conversion of no more than 3,000,000
shares of Class C Stock (the "Conversion Cap") tendered during the 1997
Conversion Period and to repurchase (on a pro rata basis among tendering
holders of Class C Stock) shares of Class C Stock tendered in excess of the
Conversion Cap ("Excess Class C Stock"). PKS will notify holders of Excess
Class C Stock of their pro rata share of Excess Class C Stock promptly after
the end of the 1997 Conversion Period, and will permit holders of Excess Class
C Stock who have indicated to PKS that they intend to remain Eligible
Shareholders through April 1, 1998 to withdraw Excess Class C Stock in
accordance with Section VI.D.(10)(f) of the Certificate by providing written
notice of withdrawal on or before the fifteenth calendar day after the date of
such notice.
(c) PKS will purchase any Excess Class C Stock not withdrawn
pursuant to Section 3.01(b), and will permit holders of any such Excess Class C
Stock to elect either (i) to receive cash in exchange for Excess Class C Stock
so purchased in accordance with Section VI.D.(10)(f) of the PKS Certificate, or
(ii) to receive unsecured promissory notes of PKS, maturing on January 15, 1999
and bearing interest, payable at maturity, at a rate of no less than 6% per
annum ("Short Term Notes"), in exchange for Excess Class C Stock. Each Short
Term Note will provide that the obligations under the Short Term Note will be
assumed by PKS Holdings if the Share Exchange is consummated. PKS will not
consummate the purchase of any Excess Class C Stock until after the Class R
Distribution Record Date, and all holders of such Excess Class C Stock will be
entitled to receive the Class R Distribution with respect to such Excess Class
C Stock.
(d) If PKS purchases Excess Class C Stock and the Transaction
is abandoned, PKS will file, within 90 calendar days after the date upon which
the Transaction is abandoned, a Form S-8 registration statement under the
Securities Act for an offering of Class D Stock to holders of purchased Excess
Class C Stock. Upon filing of that registration statement, PKS will offer to
each such holder the opportunity to elect, within 30 calendar days of the
filing, to purchase, at the Class D Per Share Price (as defined in the PKS
Certificate) as of January 1, 1998, a number of shares of Class D Stock equal
to the number of shares of Class D Stock into which his purchased Excess Class
C Stock could have been converted on the Conversion Date but for the
application of the Conversion Cap. The PKS Board may permit holders to offset
the purchase price for such shares of Class D Stock against the outstanding
principal amount and accrued interest payable pursuant to a Short Term Note.
(e) On the date of consummation of the purchase of all Excess
Class C Stock (the "Excess Purchase Date"), KCG will distribute to PKS cash in
an amount equal to all cash payments for Excess Class C Stock pursuant to
Sections 3.01(b)(i).
(f) On the Exchange Date, PKS Holdings will assume all of the
obligations of PKS under each Short Term Note, if any.
(g) Within 30 calendar days after the expiration of the 1997
Conversion Period, KCG will distribute to PKS, and PKS will contribute to KDG,
cash in an amount equal to the aggregate Class C Per Share Price (as defined in
the PKS Certificate) of the Class C Stock converted into Class D Stock during
the 1997 Conversion Period (subject to adjustment following delivery of audited
financial statements for PKS for 1997, in a manner consistent with past
practice).
3.02 Accelerated Conversion of Debentures. (a) PKS has outstanding
Series 1993 through Series 1996 Class C Convertible Debentures (the
"Debentures"). The Debentures are convertible into Class C Stock, during a one
month period in the fifth year of their terms, at a rate specified in the
Debentures. PKS will accelerate the conversion period for the Debentures to
permit holders of the Debentures ("Converting Debenture Holders") to tender for
conversion, during a ten day period beginning on December 16, 1997 and ending
on December 25, 1997 (the "Debenture Conversion Period"), any or all Debentures
into Class C Stock at the otherwise applicable conversion rate. PKS will issue
all Class C Stock with respect to all Debentures so elected to be converted on
December 26, 1997 (the "Debenture Conversion Date"). All Converting Debenture
Holders will be entitled to receive the Class R Distribution with respect to
Class C Stock issued upon conversion of the Debentures. Any Debentures not
tendered for conversion during the Debenture Conversion Period will remain
outstanding and governed by the original terms of the Debentures, and holders
of any such Debentures will not be entitled to receive the Class R Distribution
with respect to the Debentures or the related Class C Stock. If the
Transaction is consummated, PKS and PKS Holdings will use their best efforts to
agree upon an arrangement whereby the financial benefits and burdens associated
with any Debentures remaining outstanding will be borne by PKS Holdings.
(b) KCG or one of its Subsidiaries will make available to each
Converting Debenture Holder on the Debenture Conversion Date, a loan in an
amount equal to the principal amount of each Debenture (a "Debenture Loan").
Each Debenture Loan will be evidenced by a non-interest bearing promissory note
and secured pursuant to a pledge agreement in such forms as determined by KCG.
The entire principal balance of each Debenture Loan will be due and payable on
the earlier of the last day of the conversion period of the related Debenture,
as originally issued and before any modification pursuant to Section 3.02(a),
on the date of the sale or other disposition by the Converting Debenture Holder
of the related Class C Stock to PKS (other than pursuant to the Share
Exchange), or (if the Share Exchange is consummated) the related PKS Holdings
Stock to PKS Holdings, or the termination of employment of the holder.
3.03 1997 Debentures. PKS issued, on or about November 1, 1997, its
Series 1997 Class C Convertible Debentures (the "1997 Debentures"). Each 1997
Debenture will provide that if the Share Exchange is consummated, the 1997
Debentures automatically will become, without any action by PKS, PKS Holdings
or the holder thereof, a debenture of PKS Holdings (the "Replacement
Debentures") convertible into the number of shares of PKS Holdings Stock as it
was previously convertible into Class C Stock, and that PKS will no longer have
any obligation or liability under the 1997 Debentures. On or before the
Exchange Date, PKS and PKS Holdings will agree to a mutually acceptable
arrangement pursuant to which PKS Holdings will assume, or otherwise become
liable for, the obligations of PKS under the related Indenture.
3.04 Sales of Class C Stock by Eligible Class C Stockholders. (a)
Under Section VI.D.3(a) of the PKS Certificate, PKS is obligated to purchase,
at the Class C Per Share Price, any Class C Stock tendered for purchase during
the first fifteen calendar days of each month. On the Exchange Date, PKS will
deliver to PKS Holdings a schedule that sets forth the name of each Eligible
Class C Stockholder (determined as of the Exchange Date) from whom PKS has
purchased Class C Stock ("Purchased Class C Stock") between the Class R
Distribution Date and the Exchange Date (a "Selling Shareholder"), the date of
such purchase, the number of shares of Class C Stock so purchased and the total
amount paid to each such Eligible Class C Shareholder for all shares of Class C
Stock so purchased.
(b) PKS Holdings will promptly notify PKS if PKS Holdings
sells PKS Holdings Stock to any Selling Shareholder at any time between the
Exchange Date and the first anniversary of the Exchange Date (a "Subsequent
Sale"). PKS Holdings will take any action reasonably requested by PKS to
ensure that any Class R Stock distributed to the Selling Shareholder with
respect to Purchased Class C Stock becomes attached to such shares of PKS
Holdings Stock purchased in a Subsequent Sale on a pro rata basis, as
contemplated by the Certificate Amendments.
(c) In connection with Subsequent Sales of PKS Holdings Stock
to Canadians ("Canadian Shareholders"), PKS Holdings or a Subsidiary thereof
may offer to provide loans to such Canadian Shareholders, on terms acceptable
to all Parties. Within 30 calendar days after the date of each such loan, PKS
Holdings will provide PKS with a schedule that sets forth, in detail reasonably
acceptable to PKS, the terms and conditions of any and all such loans.
3.05 Initial Certificate Amendment. PKS will file the Initial
Certificate Amendment with the Secretary of State as promptly as practicable
after the Special Meeting.
3.06 Class R Distribution. (a) Subject to the satisfaction of the
Dividend Condition with respect to the Class R Distribution, PKS will declare a
dividend, payable to holders of Class C Stock as of the Class R Distribution
Record Date, of .8 of one share of Class R Stock for each share of Class C
Stock held as of the Class R Distribution Record Date.
(b) PKS will record the Class R Distribution, and register all
persons entitled to the Class R Distribution as holders of Class R Stock, on
the books and records maintained by or on behalf of PKS for the registration of
ownership of the capital stock of PKS, effective as of the Class R Distribution
Record Date. PKS will not issue certificates or other instruments to evidence
Class R Stock unless and until the Share Exchange is consummated. If the Share
Exchange is consummated, PKS will issue and distribute certificates evidencing
the Class R Stock. If the Class R Distribution is consummated, but the
Transaction is later abandoned, PKS will exercise its rights to repurchase all
of the Class R Stock under Section IX.M of the Initial Certificate Amendment as
promptly as practicable after abandonment of the Transaction.
3.07 PKSIS Reorganization. On or before the Exchange Date, KDG will
cause PKSIS to undertake such corporate reorganization as is then described in
or contemplated by the Ruling Request.
3.08 PKS Holdings Transactions. (a) From the date of this Agreement
to the Exchange Date, KCG will make such distributions to PKS as are necessary
to permit PKS to make such capital contributions and provide such other funds
to PKS Holdings as may be necessary or desirable to permit PKS Holdings to
perform and discharge its obligations under this Agreement.
(b) On or before the Exchange Date, PKS, in its capacity as
the sole shareholder of PKS Holdings, (i) will adopt the PKS Holdings
Certificate Amendment, and (ii) will elect to the board of directors of PKS
Holdings those persons designated as directors of PKS Holdings in the Joint
Prospectus/Proxy Statement, with such substitutions or additions as may be
approved by the PKS Board after the date of this Agreement.
(c) On the Exchange Date, PKS Holdings will file the PKS
Holdings Certificate Amendment with the Secretary of State.
(d) On the Exchange Date, PKS will make a capital contribution
to PKS Holdings of (i) all of the capital stock of KCG held by PKS, and (ii)
such other assets as agreed to by the Parties and described on a Schedule to be
attached to the Agreement on or before the Exchange Date. On the Exchange
Date, PKS Holdings will distribute to PKS a sufficient number of shares of PKS
Holdings Stock, evidenced by a single certificate, so that, together with such
shares previously issued to PKS, PKS will hold shares of PKS Holdings Stock
equal to the number of shares of Class C Stock outstanding on the Exchange
Record Date.
3.09 Share Exchange. (a) Not more than 60 calendar days, but not less
than 30 calendar days, prior to the Exchange Date, PKS shall give each holder
of Class C Stock the notice contemplated by Section III.D.(3)(a) of the PKS
Certificate (the "Exchange Provision"). Each notice will set forth the
Exchange Record Date and the information required by the Exchange Provision,
and will establish such procedures for the Share Exchange as are permitted by
the Exchange Provision and otherwise deemed appropriate by PKS.
(b) On the Exchange Date, PKS will exchange, pursuant to the
Exchange Provision, one share of the PKS Holdings Common Stock received
pursuant to Section 3.11(a) for each share of Class C Common Stock outstanding
as of the Exchange Date. On and after the Exchange Date, all rights of holders
of Class C Stock will be governed by the Exchange Provisions.
(c) The Share Exchange will be consummated only after
consummation of all of the Separation Transactions intended to be consummated
on the Exchange Date.
3.10 Post-Transaction Certificate Amendment. If the Share Exchange is
consummated, PKS will file the Post-Transaction Certificate Amendment with the
Secretary of State on the Exchange Date.
3.11 Certificate Surrender and Distribution. (a) As promptly as
practicable after the Exchange Date, PKS Holdings will deliver to PKS, in
exchange for the PKS Holdings Stock certificate described in Section 3.08(d),
certificates for PKS Holdings Stock in names and denominations sufficient to
permit PKS to distribute certificates for PKS Holdings Stock to each holder of
Class C Stock in the same denominations as the Class C Stock then held by such
holder, subject, in each case, to surrender by such holder in accordance with
the Exchange Provision of the certificates evidencing the related shares of
Class C Stock.
(b) PKS will coordinate delivery of share certificates with
any lending institution to which shares of Class C Stock have been pledged. PKS
will arrange for delivery of the shares of Class C Stock to be exchanged and
will, if directed in writing by the holder of such shares of Class C Stock,
deliver shares of PKS Holdings Stock and Class R Stock directly to such lending
institution.
3.12 Class R Stock Provisions. (a) So long as any shares of Class R
Stock remain outstanding, PKS will take all necessary action (i) to obtain
and keep effective any and all permits, consents and approvals of
governmental agencies and authorities and to make filings under federal and
state securities acts and laws, which may be or become requisite in
connection with the issuance, sale, transfer and delivery of the shares of
Class D Stock issued upon conversion of shares of Class R Stock, and (ii) if
the Class D Stock is Publicly Traded (as defined in the PKS Certificate), to
have the shares of Class D Stock, immediately upon their issuance upon
conversion of the shares of Class R Stock, listed on each national securities
exchange, the NASDAQ National Market or the NASDAQ Small Cap Market on which
the Class D Stock is then listed or traded. So long as any shares of Class R
Stock remain outstanding and if required in order to comply with the
Securities Act or state securities laws, PKS will file such post-effective
amendments to the Registration Statement as may be necessary to permit the
Corporation to deliver to each person converting shares of Class R Stock a
prospectus meeting the requirements of Section 10(a)(3) of the Securities Act
and otherwise complying therewith, and, if required in order to comply with
the Securities Act or state securities laws, will deliver such a prospectus
to each such person.
(b) PKS will not, by amendment of the PKS Certificate, or
through any reorganization, transfer of assets, consolidation, merger,
dissolution, issue or sale of securities or any voluntary action, seek to
avoid the observance or performance of any of its obligations with respect to
the Class R Stock.
(c) After the date upon which the Class R Stock becomes
convertible into Class D Stock, and in order to provide holders of Class R
Stock a means to determine the Conversion Ratio when the Class D Stock is
Publicly Traded (as both such terms are defined in the PKS Certificate), PKS
shall establish reasonable measures intended to enable holders of Class R
Stock to obtain information at any time during normal business hours.
ARTICLE IV
INDEMNIFICATION
4.01 Indemnification. (a) From and after the Exchange Date, PKS and
KDG will indemnify, defend and hold harmless each Construction Indemnitee from
and against all Losses incurred or suffered by any Construction Indemnitee
arising out of or due to, directly or indirectly, (i) any breach by PKS or KDG
of any obligation under this Agreement, (ii) the Diversified Assets, (iii) the
Diversified Business, (iv) Diversified Securities Transactions, (v) Diversified
Liabilities, (vi) the Covent Liabilities (as defined in Section 5.10(f)) and
(vii) such other matters as are specifically agreed by the Parties and
described on a Schedule attached to the Agreement on or before the Exchange
Date.
(b) From and after the Exchange Date, PKS Holdings and KCG
will indemnify, defend and hold harmless each Diversified Indemnitee from and
against all Losses incurred or suffered by any Diversified Indemnitee arising
out of or due to, directly or indirectly, (i) any breach by PKS Holdings or KCG
of any obligation under this Agreement, (ii) the Construction Assets, (iii) the
Construction Business, (iv) Construction Securities Transactions, (v)
Construction Liabilities, and (vi) such other matters as are specifically
agreed by the Parties and described on a Schedule attached to the Agreement on
or before the Exchange Date.
(c) This Section 4.01 shall not apply to any matter or item
specifically covered by indemnification or risk allocation provisions of the
Continuing Agreements.
(d) If an Indemnitee realizes a Tax benefit or detriment by
reason of having incurred a Loss for which such Indemnitee receives an
Indemnity Payment from an Indemnifying Party or by reason of receiving an
Indemnity Payment, such Indemnitee shall pay to such Indemnifying Party an
amount equal to the Tax benefit, or such Indemnifying Party shall pay to such
Indemnitee an additional amount equal to the Tax detriment (taking into account
any Tax detriment resulting from the receipt of such additional amounts), as
the case may be. If, in the opinion of counsel to an Indemnifying Party
reasonably satisfactory in form and substance to the affected Indemnitee, there
is a substantial likelihood that the Indemnitee will be entitled to a Tax
benefit by reason of an Indemnifiable Loss, the Indemnifying Party promptly
shall notify the Indemnitee and the Indemnitee promptly shall take any steps
(including the filing of such returns, amended returns or claims for refunds
consistent with the claiming of such Tax benefit) that, in the reasonable
judgment of the Indemnifying Party, are necessary and appropriate to obtain any
such Tax benefit. If, in the opinion of counsel to an Indemnitee reasonably
satisfactory in form and substance to the affected Indemnifying Party, there is
a substantial likelihood that the Indemnitee will be subjected to a Tax
detriment by reason of an Indemnification Payment, the Indemnitee promptly
shall notify the Indemnifying Party and the Indemnitee promptly shall take any
steps (including the filing of such returns or amended returns or the payment
of Tax underpayments consistent with the settlement of any Liability for Taxes
arising from such Tax detriment) that, in the reasonable judgment of the
Indemnitee, are necessary and appropriate to settle any Liabilities for Taxes
arising from such Tax detriment. If, following a payment by an Indemnitee or
an Indemnifying Party pursuant to this Section 4.01(d) in respect of a Tax
benefit or detriment, there is an adjustment to the amount of such Tax benefit
or detriment, then each of the Indemnifying Party and the Indemnitees shall
make appropriate payments to the other to reflect such adjustments.
(e) The amount which an Indemnifying Party is required to pay
to any Indemnitee pursuant to this Section 4.01 will be reduced (including
retroactively) by any insurance proceeds and other amounts actually recovered
by such Indemnitee in reduction of the related Loss, it being understood and
agreed that the members of each Group will use their commercially reasonable
efforts to collect any such proceeds or other amounts to which they are
entitled, without regard to whether it is the Indemnifying Party hereunder. If
an Indemnitee receives an Indemnity Payment in respect of an Indemnifiable Loss
and subsequently receives insurance proceeds or other amounts in respect of
such Indemnifiable Loss, then such Indemnitee shall pay to such Indemnifying
Party an amount equal to the difference between (i) the sum of the amount of
such Indemnity Payment and the amount of such insurance proceeds or other
amounts actually received and (ii) the amount of such Loss, adjusted (at such
time as appropriate adjustment can be determined) in each case to reflect any
premium adjustment attributable to such claim.
(f) No person other than an Indemnitee is intended to be a
beneficiary of the indemnification provisions set forth above, and no insurer
will be relieved thereby of any obligation to pay any claims to which it is
obligated or be entitled to any right of subrogation with respect to any amount
paid hereunder.
4.02 Procedure for Indemnification. (a) If any Indemnitee determines
that it is or may be entitled to indemnification by any Indemnifying Party
(other than in connection with any Third Party Claim), the Indemnitee will
deliver to the Indemnifying Party a written notice specifying, to the extent
reasonably practicable, the basis for its claim for indemnification and the
amount for which the Indemnitee reasonably believes it is entitled to be
indemnified. Within 60 calendar days after receipt of such notice, the
Indemnifying Party will pay the Indemnitee such amount in cash or other
immediately available funds unless the Indemnifying Party objects to the claim
for indemnification or the amount by written notice setting forth the grounds
therefor within such 60 calendar day period. If the Indemnifying Party does
not give the Indemnified Party written notice objecting to such indemnity claim
and setting forth the grounds therefor within 60 calendar days after receipt of
such notice, the Indemnifying Party will be deemed to have acknowledged its
liability for such claim and the Indemnitee may exercise any and all of its
rights under applicable law to collect such amount.
(b) If any Indemnitee receives notice of the assertion of any
Third-Party Claim with respect to which an Indemnifying Party is obligated
under this Agreement to provide indemnification, such Indemnitee will give such
Indemnifying Party notice thereof promptly after becoming aware of such Third-
Party Claim; provided, however, that the failure of any Indemnitee to give such
notice will not relieve any Indemnifying Party of its obligations under this
Article IV, except to the extent that such Indemnifying Party is actually
prejudiced by such failure to give notice. Such notice will describe such
Third-Party Claim in reasonable detail and, if practicable, will indicate the
estimated amount of the Indemnifiable Loss that has been or may be sustained by
such Indemnitee.
(c) An Indemnifying Party, at such Indemnifying Party's own
expense and through counsel chosen by such Indemnifying Party (which counsel
shall be reasonably satisfactory to the Indemnitee), may elect to defend any
Third-Party Claim. If an Indemnifying Party elects to defend a Third-Party
Claim, then, within fifteen calendar days after receiving notice of such Third-
Party Claim (or sooner, if the nature of such Third-Party Claim so requires),
such Indemnifying Party will notify the Indemnitee of its intent to do so, and
such Indemnitee shall cooperate in the defense of such Third-Party Claim. Such
Indemnifying Party will pay such Indemnitee's reasonable out-of-pocket expenses
incurred in connection with such cooperation. After notice from an
Indemnifying Party to an Indemnitee of its election to assume the defense of a
Third-Party Claim, such Indemnifying Party will not be liable to such
Indemnitee under this Article IV for any legal or other expenses subsequently
incurred by such Indemnitee in connection with the defense thereof; provided,
however, that such Indemnitee will have the right to employ one law firm as
counsel to represent such Indemnitee (which firm shall be reasonably acceptable
to the Indemnifying Party) if, in such Indemnitee's reasonable judgment, either
a conflict of interest between such Indemnitee and such Indemnifying Party
exists in respect of such claim or there may be defenses available to such
Indemnitee which are different from or in addition to those available to such
Indemnifying Party, and in that event (i) the reasonable fees and expenses of
such separate counsel shall be paid by such Indemnitee and (ii) each of such
Indemnifying Party and such Indemnitee shall have the right to run its own
defense in respect of such claim. If an Indemnifying Party elects not to
defend against a Third-Party Claim, or fails to notify an Indemnitee of its
election as provided in this Section 4.02 within the period of fifteen calendar
days described above, such Indemnitee may defend, compromise and settle such
Third-Party Claim; provided, however, that no such Indemnitee may compromise or
settle any such Third-Party Claim without the prior written consent of the
Indemnifying Party, which consent shall not be withheld unreasonably.
Notwithstanding the foregoing, the Indemnifying Party shall not, without the
prior written consent of the Indemnitee, (i) settle or compromise any Third-
Party Claim or consent to the entry of any judgment which does not include as
an unconditional term thereof the delivery by the claimant or plaintiff to the
Indemnitee of a written release from all liability in respect of such Third-
Party Claim or (ii) settle or compromise any Third-Party Claim in any manner
that in the reasonable judgment of the Indemnifying Party, is likely to
adversely affect the Indemnitee.
(d) If for any reason the indemnification provided by this
Agreement is unenforceable, the Indemnifying Party will contribute to the
amount payable by the Indemnitee as a result of the related losses an amount
appropriate to reflect equitable considerations.
4.03 Remedies Cumulative. The remedies provided in this Article IV
will be cumulative and will not preclude assertion by any Indemnitee of any
other rights or the seeking of any other remedies against any Indemnifying
Party.
ARTICLE V
ADDITIONAL COVENANTS
5.01 Further Assurances. Each of the Parties will use its best
efforts to take, or cause to be taken, all actions, and to do, or cause to be
done, all things, reasonably necessary, proper or advisable under applicable
laws, regulations and agreements to consummate and make effective the
Transactions. Each Party will cooperate with the other Parties, and execute
and deliver, or use its best efforts to cause to be executed and delivered, all
instruments, including instruments of conveyance, assumption, assignment and
transfer, and to make all filings with, and to obtain all consents, approvals
or authorizations of, any governmental or regulatory authority or any other
Person under any permit, license, agreement, indenture or other instrument, and
take all such other actions as such Party may reasonably be requested to take
by any other Party, consistent with the terms of this Agreement, in order to
effectuate the provisions and purposes of this Agreement.
5.02 Transfer of Assets; Assumption of Liabilities. (a) The Parties
intend that, upon consummation of the Share Exchange, (i) one or more members
of the Construction Group, and not any member of the Diversified Group, will
hold all right, title and interest in and to all Construction Assets, and that
one or more members of the Construction Group, and not any member of the
Diversified Group, will have the sole liability for Construction Group
Liabilities; and (ii) one or more members of the Diversified Group, and not any
member of the Construction Group, will hold all right, title and interest in
and to all Diversified Assets, and one or more members of the Diversified
Group, and not any member of the Construction Group, will have the sole
liability for all Diversified Group Liabilities.
(b) Prior to the Exchange Date, each Party will take any
action, and will cause their Subsidiaries to take any action, requested by any
member of the other Group entitled under Section 5.02(a) to obtain an Asset or
to be relieved of a Liability, reasonably necessary to transfer any such Asset
or to assume any such Liability. If any such transfer or assumption of Assets
or Liabilities is not consummated on or before the Exchange Date, the Party
retaining such Asset or Liability will hold such Asset in trust for the use and
benefit of the Party entitled thereto (at the expense of the Party entitled
thereto), or will retain such Liability for the account of the Party by whom
such Liability is to be assumed pursuant hereto, as the case may be, and will
take such other action as may be reasonably requested by the Party to whom such
Asset is to be transferred (including licensing, contracting and leasing
arrangements), or by whom such Liability is to be assumed, in order to place
such Party, insofar as reasonably possible, in the same position as if such
Asset or Liability had been transferred as contemplated hereby. If and when
any such Asset or Liability becomes transferable, such transfer will be
effected as promptly as possible.
(c) Notwithstanding any other provision of this Agreement,
this Agreement will not constitute an agreement to transfer any Asset or assume
any Liability if an assignment of the Asset or the assumption of the Liability
violates any law, rule or regulation or constitutes a breach of any agreement
relating to such Asset or Liability.
5.03 No Representations or Warranties. Each Group understands and
agrees that no member of the other Group is, in this Agreement, representing or
warranting in any way as to the Assets, the Business or the Liabilities of the
Group or as to any consents or approvals required in connection with the
consummation of the transactions contemplated by this Agreement, it being
agreed and understood that each Group is taking all of its Assets "as is, where
is" and that each Group will bear the economic and legal risk that the title of
any member of the Group to any Assets shall be other than good and marketable
and free from encumbrances.
5.04 Terminated Agreements. On or before the Exchange Date, the
Parties will agree to a schedule of agreements, contracts and arrangements that
will terminate and have no further force or effect as of the Exchange Date.
Each Party shall, at the reasonable request of another Party, take or cause to
be taken, such other actions as may be necessary to effect the termination of
such agreements.
5.05 Continuing Agreements. Neither this Agreement nor the Share
Exchange shall modify, amend or otherwise affect any agreements contemplated by
Section 5.11 or Section 5.12 or any other agreement between a member or members
of the Construction Group, on one hand, and a member or members of the
Diversified Group, on the other hand (together, the "Continuing Agreements"),
except for those agreements terminated pursuant to the provisions of Section
5.04. If there is a conflict between this Agreement and a Continuing
Agreement, the Continuing Agreement shall control.
5.06 Intercompany Accounts. Effective as of the close of business on
the day prior to the Exchange Date, all intercompany receivables or payables
and loans then existing between any member of one Group and any member of the
other Group will be settled by way of payment, cancellation or capital
contribution.
5.07 HSR Act. PKS Holdings will file any notification and report
forms and other material required by the Xxxx Xxxxx Xxxxxx Antitrust
Improvements Act of 1976, as amended (the "HSR Act") with respect to the shares
of PKS Holdings Stock to be distributed in the Share Exchange prior to the
Exchange Date, and will seek early termination of the waiting period under the
HSR Act.
5.08 Kiewit Name. (a) Not later than the first business day after the
Exchange Date (i) PKS will change its corporate name to another name not
including "PKS" or "Kiewit" as part of the name, and, (ii) except as provided
in Section 5.08(b), will cause all of its Subsidiaries to change their
corporate names if necessary to corporate names not including "PKS" or "Kiewit"
as part of the name. As soon as reasonably practicable after the Exchange
Date, and except as provided in Section 5.08(b), PKS will use its best efforts
to, and will cause its Subsidiaries to use their best efforts to, cease using
"PKS" or "Kiewit" in connection with the business activities of the Diversified
Group.
(b) Notwithstanding Section 5.08(a), (i) the members of the
Diversified Group will have the right to use "PKS" or "Kiewit" for a period of
one year from the Exchange Date to the extent reasonably necessary in
accordance with its past practice in connection with legal, regulatory or
contract matters relating to Diversified Group business activities in existence
on the Exchange Date, and (ii) PKSIS and its current information services
Subsidiaries will not be required to comply with Section 5.08(a), and will have
the right to continue to use "PKS" in accordance with its past practice in
connection with its businesses until the second anniversary of the Exchange
Date.
(c) As of the Exchange Date, PKS assigns, and will cause each
of its Subsidiaries to execute any agreement or instrument reasonably requested
by PKS Holdings to assign, any and all of its right, title and interest in and
to any corporate name, trademark or tradename using "PKS" or "Kiewit," and any
and other proprietary rights to those names or related symbols.
5.09 Sales of Class C Stock. Except as contemplated by Section 3.02,
PKS will not offer to sell, sell or issue any Class C Stock between the date of
this Agreement and the Class R Record Date.
5.10 Insurance. (a) As of the Exchange Date, directors and officers
of the members of the Construction Group will no longer be covered by the
directors and officers liability insurance maintained by PKS for directors and
officers of PKS and its subsidiaries (the "PKS D&O Policy") for acts occurring
on and after the Exchange Date. PKS Holdings will obtain, effective not later
than the Exchange Date, directors and officers liability insurance for all
directors and officers of the members of the Construction Group, on such terms
and conditions and providing such coverages as PKS Holdings deems appropriate.
PKS shall obtain a separate directors and officers liability insurance policy
("Tail Policy") for all present and past directors and officers of the
Construction Group in effect for a minimum of 5 years from the Exchange Date.
The cost of the premiums payable with respect to the Tail Policy shall be
allocated 82.5% to the Diversified Group and 17.5% to the Construction Group.
(b) No Party shall, without the consent of the other Parties, provide
any insurance carrier with a release, or amend, modify or waive any rights
under any such policy or agreement, if such release, amendment, modification or
waiver would adversely affect any rights or potential rights of another Group;
provided, however, that the foregoing shall not preclude a Party either from
presenting any claim or from exhausting any policy limit.
(c) This Agreement shall not be considered as an attempted assignment
of any policy of insurance or as a contract of insurance and shall not be
construed to waive any right or remedy of the Parties in respect of any
insurance policy or any other contract or policy of insurance.
(d) From and after the Exchange Date, PKS Holdings shall be entitled
to the benefit of any reserves held by any insurance carrier with respect to
the Construction Liabilities, and PKS shall be entitled to the benefit of any
reserves held by any insurance carrier with respect to the Diversified
Liabilities.
(e) On or before the Exchange Date, the Parties will agree upon the
insurance policies in which PKS is the lead named insured which will be amended
to substitute PKS Holdings as the lead named insured effective as of the
Exchange Date. Each Party shall, at the reasonable request of another Party,
take or cause to be taken, such other actions as may be necessary to effectuate
such change.
(f) By agreement dated November 30, 1992 (the "Transfer Agreement"),
Covent Vermont Insurance Company ("Covent"), then a subsidiary of KDG,
transferred to Global Surety and Insurance Co. ("Global"), a subsidiary of KCG,
all reinsurance business liabilities held by Covent ("Covent Liabilities"), in
exchange for certain cash payments and other consideration. It is the intent of
the Parties to reverse the transfer of the Covent Liabilities, thereby
returning to KDG all responsibility originally held by Covent for the Covent
Liabilities, and releasing Global of any and all further liability and
responsibility for the Covent Liabilities. In this regard, the Parties agree to
work together to effect such reversal, effective as soon as possible.
(g) Notwithstanding any other provision hereof, each Group shall
retain all rights of any insured party under each insurance policy and
insurance contract owned or maintained by PKS under which any member of such
Group is a named insured, including any right of indemnity and the right to be
defended by or at the expense of the insurer. Each Party shall pay its
allocable share of any retrospectively-rated premiums arising out of any claims
made by such Party under such insurance policies.
(h) The Parties agree to cooperate and provide reasonable assistance
to each other with regard to any dispute with any third party (including
insurers or third-party administrators) regarding any matter related to any of
the above insurance policies.
5.11 Unresolved Matters. The Parties agree to negotiate in good faith
and enter into on or before the Exchange Date, mutually acceptable agreements
or arrangements with respect to certain unresolved matters, including the
matters described below (the "Unresolved Matters"), and will amend and restate
this Agreement to the extent necessary or desirable to conform with those
agreements or arrangements. The unresolved matters include: (i) the lease by
KDG of office space from KCG in the KCG headquarters building at Kiewit Plaza,
Omaha, Nebraska; (ii) the provision by KCG of aircraft flight and maintenance
services to KDG; (iii) the provision by KCG of interim stock registrar and
transfer agent services to PKS; (iv) the treatment of employees of KDG who are
participants prior to the Exchange Date in the 401(k) and profit sharing plans
maintained by KCG; (v) the administration of the Xxxxxx Royalty Trust; (vi) the
ownership of Kiewit Investment Management Corp. (vii) modifications to the mine
management agreement dated January 8, 1992 by and between Kiewit Coal
Properties Inc. and Kiewit Mining Group Inc.; and (viii) administration of
insurance claims with respect to policies maintained for the benefit of both
Business Groups prior to the Exchange Date.
5.12 Tax Allocation Agreement. The Parties agree to negotiate in good
faith and enter into the Tax Allocation Agreement on or before the Exchange
Date.
ARTICLE VI
INFORMATION
6.01 Access to Information. (a) As soon as practicable following the
Exchange Date, and to the extent requested, each Group shall provide to the
other Group any documents, contracts, books, records and data (including but
not limited to minute books, stock registers, stock certificates and documents
of title) in its possession relating to such other Group or such other Group's
business and affairs; provided that if any such documents, contracts, books,
records or data relate to both Groups or the business and operations of both
Groups, each such Group shall provide to the other Group true and complete
copies of such documents, contracts, books, records or data.
(b) After the Exchange Date, each Group will afford to the
other Group and to the other Group's Representatives reasonable access and
duplicating rights during normal business hours to all Information within such
Group's possession relating to such other Group's businesses, insofar as such
access is reasonably required by such other Group. In addition, PKS Holdings
shall have access during such time to Information of historical significance
that relates to the Construction Business. Without limiting the foregoing,
Information may be requested under this Section for audit, accounting, claims,
litigation and tax purposes, as well as for purposes of fulfilling disclosure
and reporting obligations.
6.02 Production of Witnesses. After the Exchange Date, each Group
will use reasonable efforts to make available to the other Group its
Representatives as witnesses to the extent that any such Person may reasonably
be required in connection with any legal, administrative or other proceedings
in which the requesting Party may from time to time be involved and will
otherwise cooperate with the other Group, to the extent reasonably required in
connection with any such proceeding.
6.03 Retention of Records. Except as otherwise required by law or
agreed in writing, or as otherwise provided in the Continuing Agreements, each
Group will retain, for a period of at least ten years following the
Distribution Date, all significant Information in such Group's possession or
under its control relating to the business of the other Group and, after the
expiration of such ten year period, prior to destroying or disposing of any
such Information, (a) the Group proposing to dispose of or destroy any such
Information shall provide no less than 90 calendar days' prior written notice
to the other Group, specifying the Information proposed to be destroyed or
disposed of, and (b) if, prior to the scheduled date for such destruction or
disposal, the other Group requests in writing that any of the Information
proposed to be destroyed or disposed of be delivered to such other Group, the
Group proposing to dispose of or destroy such Information promptly shall
arrange for the delivery of the requested Information to a location specified
by, and at the expense of, the requesting Group.
6.04 Reimbursement. Each Group providing information or witnesses to
the other Group, or otherwise incurring any expense under Section 6.01, 6.02 or
6.03, including costs and expenses paid to third parties for storage of
Information on behalf of the other Group, will be entitled to receive from the
other Group, upon the presentation of invoices therefor, payment for all out-
of-pocket costs and expenses as may be reasonably incurred in providing such
information, witnesses or cooperation.
6.05 Confidentiality. From and after the Exchange Date, each Group
will hold, and shall use its reasonable best efforts to cause its
Representatives to hold, in confidence all Information concerning the other
Party obtained by it prior to the Exchange Date or furnished to it by such
other Party pursuant to this Agreement or the Continuing Agreements, and will
not release or disclose such Information to any other Person, except its
Representatives, who will be bound by the provisions of this Section; provided,
however, that each Group may disclose such Information to the extent that (a)
disclosure in the opinion of such Group's counsel, is required or advisable
under applicable law (including the federal securities laws), or (b) such Group
can show that such Information was (i) available to such Group on a
nonconfidential basis prior to its disclosure by the other Group, (ii) in the
public domain through no fault of such Group or (iii) lawfully acquired by such
Party from other sources after the time that it was furnished to such Party
pursuant to this Agreement or the Continuing Agreements. Notwithstanding the
foregoing, each Group will be deemed to have satisfied its obligations under
this Section with respect to any Information if it exercises the same care with
regard to such Information as it takes to preserve confidentiality for its own
similar Information.
ARTICLE VII
EXPENSES
7.01 General. The Parties have agreed to allocate the financial
burden of Covered Expenses 82.5% to the Diversified Group and 17.5% to the
Construction Group (the "Expense Sharing Ratio"), whether the Transaction is
consummated or abandoned. All other costs or expenses incurred by any Party in
connection with the Transaction will be borne by the Party incurring the cost
or expense.
7.02 Covered Expenses. (a) The following costs and expenses incurred
by any Party will be considered to be "Covered Expenses":
(i) fees and expenses of U.S. corporate counsel to PKS,
Xxxxxxx Xxxx & Xxxxxxxxx, Canadian corporate counsel to PKS, Blake, Xxxxxxx &
Xxxxxxx, and Delaware counsel to PKS, Morris, Nichols, Arsht & Tunnel, in each
case to the extent allocated to the Transaction in accordance with Section
7.02(c);
(ii) fees and expenses of U.S. tax counsel to PKS, Xxxxxxx
Xxxx, Slate, Xxxxxxx & Xxxx, Canadian tax counsel to PKS, Blake, Xxxxxxx &
Xxxxxxx, and Nebraska tax counsel to PKS, XxXxxxx, North, Xxxxxx & Xxxxx, P.C.,
in each case to the extent allocated to the Transaction in accordance with
Section 7.02(c);
(iii) fees and expenses of the certified public accountants
for PKS, Coopers & Xxxxxxx, to the extent allocated to the Transaction in
accordance with Section 7.02(c);
(iv) fees and expenses of Gleacher NatWest, financial
advisor to PKS, incurred pursuant to the engagement letter of Gleacher NatWest
dated as of June 1, 1997, to the extent allocated to the Transaction in
accordance with Section 7.02(c);
(v) all registration fees or other similar expenses payable
to the SEC, any state securities commission, or the Service, and all fees and
expenses in connection with any filing under the HSR Act;
(vi) all costs and expenses incurred in connection with the
printing and distribution of the Joint Prospectus/Proxy Statement;
(vii) all costs and expenses of the proxy solicitation and
the Special Meeting;
(viii) a non-accountable cost allowance in an amount to be
mutually agreed upon by the Parties for costs and expenses incurred by PKS
Holdings in connection with the Debenture Loans; and
(ix) a non-accountable cost allowance in an amount to be
mutually agreed upon by the Parties for costs and expenses incurred by PKS
Holdings in connection with certain loans to its Canadian shareholders.
(b) The Parties acknowledge that certain of the fees and
expenses of the advisors described in (i), (ii), (iii) and (iv) of Section
7.02(a) are to be incurred solely for the account of certain of the Parties,
and will not be considered to be Covered Expenses. Each such Advisor will
allocate its fees and expenses between Covered Expenses and costs and expenses
incurred solely for the account of one of the Parties, and such allocation will
be binding on each of the Parties.
7.03 Actual Payment of Covered Expenses. KCG will make actual payment
of the Covered Expenses described in items (viii) and (ix) of Section 7.02(a).
KDG will make actual payment of all other Covered Expenses ("Other Covered
Expenses").
7.04 Covered Expense True-Up. KDG will prepare and submit to KCG,
within 120 calendar days after the date of abandonment of the Transaction or
the Exchange Date, as the case may be, a schedule of the Other Covered
Expenses, together with such supporting documentation with respect to the Other
Covered Expenses as KCG reasonably requests. Within five calendar days after
the submission of that schedule, KDG will pay KCG in cash an amount sufficient
to ensure that the financial burden of the Covered Expenses has been allocated
between KCG and KDG in proportion to the Expense Sharing Ratio.
ARTICLE VIII
MISCELLANEOUS
8.01 Complete Agreement. This Agreement, the Exhibits and Schedules
hereto and the agreements and other documents referred to herein will
constitute the entire agreement between the Parties with respect to the subject
matter hereof and will supersede all previous negotiations, commitments and
writings with respect to such subject matter.
8.02 Survival of Agreements. All covenants and agreements of the
Parties contained in this Agreement will survive the Share Exchange.
8.03 Governing Law. This Agreement will be governed by and construed
in accordance with the laws of the State of Nebraska (other than the laws
regarding choice of laws and conflicts of laws) as to all matters, including
matters of validity, construction, effect, performance and remedies.
8.04 Notices. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be given (and shall be
deemed to have been duly given upon receipt) by delivery in person, by cable
telegram, telex or other standard form of telecommunications, or by registered
or certified mail, postage prepaid, return receipt requested, addressed as
follows:
If to PKS or KDG:
Vice President - Legal
Kiewit Diversified Group Inc.
Xxxxx 000
0000 Xxxxxx Xxxxxx
Xxxxx, XX 00000
with a copy to:
President
Kiewit Diversified Group Inc.
Suite 200
0000 Xxxxxx Xxxxxx
Xxxxx, XX 00000
If to PKS Holdings:
General Counsel
Kiewit Construction Group Inc.
0000 Xxxxxx Xxxxx
Xxxxx, XX 00000
with a copy to:
President
Kiewit Construction Group Inc.
0000 Xxxxxx Xxxxx
Xxxxx, XX 00000
8.05 Amendment and Modifications. This Agreement may be amended,
modified or supplemented, and any provision of this Agreement may be waived,
only by a written agreement signed by all of the Parties.
8.06 Successors and Assigns; No Third-Party Beneficiaries. This
Agreement and all of the provisions hereof will be binding upon and inure to
the benefit of the Parties, their successors and permitted assigns, but neither
this Agreement nor any of the rights, interest and obligations hereunder may be
assigned by any Party without the prior written consent of each of the other
Parties (which consent shall not be unreasonably withheld). This Agreement is
solely for the benefit of the Parties (and Indemnitees) and is not intended to
confer any rights or remedies upon any other Persons.
8.07 Counterparts. This Agreement may be executed in two or more
counterparts, each of which will be deemed an original, but all of which
together will constitute one and the same instrument.
8.08 Interpretation. (a) The Article and Section headings contained
in this Agreement are solely for the purpose of reference, are not part of the
agreement of the Parties and shall not in any way affect the meaning or
interpretation of this Agreement.
(b) The Parties intend that the Share Exchange will be a
distribution pursuant to Section 355(a) and Section 368(a)(1)(D) of the Code,
and all provisions of this Agreement will be so interpreted.
8.09 Legal Enforceability. Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction will, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof. Any such prohibition or
unenforceability in any jurisdiction will not invalidate or render
unenforceable such provision in any other jurisdiction. Each Party
acknowledges that money damages would be an inadequate remedy for any breach of
the provisions of this Agreement and agrees that the obligations of the Parties
under this Agreement will be specifically enforceable.
8.10 Dispute Resolution. Except to the extent that a Party seeks
injunctive relief to enforce any particular provision of this Agreement, if, in
the event of any dispute or controversy arising out of this Agreement, its
performance, or breach, the Parties are unable to settle the dispute
themselves, within thirty (30) calendar days after the dispute arises, then the
dispute shall be referred for resolution by agreement between the Chief
Executive Officer of PKS Holdings and the President of PKS. In the event that
the foregoing officers are unable to resolve such dispute within thirty (30)
calendar days, then the Parties shall be free to pursue any other rights or
remedies to which they may be entitled.
8.11 Schedules. All schedules referred to herein are a part of this
Agreement as if fully set forth herein.
IN WITNESS WHEREOF, the Parties have caused this Agreement to be duly
executed as of the date first above written.
XXXXX XXXXXX SONS', INC.
By /s/ Xxxxxx Xxxxx, Xx.
Xxxxxx Xxxxx, Xx., President
KIEWIT DIVERSIFIED GROUP INC.
By /s/ Xxxxx X. Xxxxx
Xxxxx X. Xxxxx, President
PKS HOLDINGS, INC.
By /s/ Xxxxxxx X. Xxxxxxx
Xxxxxxx X. Xxxxxxx, President
KIEWIT CONSTRUCTION GROUP INC.
By /s/ Xxxxxxx X. Xxxxxxx
Xxxxxxx X. Xxxxxxx, President
